INTENTION TO PAY ZAKAH ON EMPLOYMENT INCOME AMONG MANUFACTURING EMPLOYEES
IN PENANG
IDA HUSNA BINTI HEDZIR
UNIVERSITI UTARA MALAYSIA
2009
INTENTION TO PAY ZAKAH ON EMPLOYMENT INCOME AMONG MANUFACTURING EMPLOYEES
IN PENANG
A thesis submitted to the Graduate School in partial fulfillment of the requirement for the degree Master of Business Administration (Accounting)
By
Ida Husna Binti Hedzir
© Ida Husna Binti Hedzir, 2009. All Rights Reserved
i
DECLARATION
I certify that the substance of this thesis has not been already been submitted to any degree and is not currently being submitted for and other degree qualification.
I certify that any help received in preparing this thesis and all sources used have been acknowledged in this thesis.
Ida Husna Binti Hedzir 88126
College of Business Universiti Utara Malaysia 06010 Sintok
Kedah
17 May 2009
ii
PERMISSION TO USE
In presenting this dissertation in partial fulfillment of the requirement for a postgraduate degree from Universiti Utara Malaysia, I agree that the University Library may make it freely available for inspection. I further agree that permission for copying of this thesis in any manner, in whole or in part, for scholarly purposes may be granted by my supervisor(s) or, in absence, by the Deputy Vice Chancellor of College of Business. It is understood that any copying or publication or use of this thesis or parts thereof for financial gain should not be allowed without my written permission. It is also understood that due recognition shall be given to me and to Universiti Utara Malaysia for any scholarly use which may be made of any material from my thesis.
Request for permission to copy or to make other use of materials in this thesis, in while or in part, should be addressed to:
Deputy Vice Chancellor of College of Business Universiti Utara Malaysia
06010 UUM Sintok Kedah Darul Aman
iii ABSTRACT
Previous research on zakah on employment income amongst public and private sector employees has been done before but not amongst manufacturing employees. In Penang, manufacturing employee can potentially be significant contributors to zakah on employment income.
Basically this study examines the relationship between attitude, subjective norm and perceived behavior control on zakah compliance intention on manufacturing employees in the Free Industrial Trade Zone Bayan Lepas Penang, using theory of planned behavior. One hundred and seventy three complete questionnaires that measured attitude (ATT), subjective norm (SN), perceived behavior control (PBC) and intention (ITT) to pay zakah on employment income were returned. The findings of the study show that attitude (ATT) and perceived behavior control (PBC) significantly influence intention to comply with zakah on income. Subjective norm (SN), however, did not show any significant influence on zakah compliance. In general, the study reveals that theory of planned behavior is capable in predicting zakah compliance intention and hence zakah compliance behavior. The findings of the present study can be used for the institution of zakah and policy makers to promote and educate the general public as to the importance of zakah on employment income. The implication of the findings to future research and the limitations of the present study are also highlighted.
KEYWORDS: Attitude, Subjective Norm, Perceived Behavior Control, Intention, Zakah
iv
ACKNOWLEDGEMENT
Alhamdullilah, I am very grateful to Allah S.W.T for His blessing and mercy that after all my hard work and patience as a part time student, I was finally able to complete this thesis which is part of requirement to fulfill the study program.
I wish to take this opportunity to thank individuals or institution that has been helpful and instrumental in my research Endeavour. First and foremost, I would like to thank my supervisor, Dr. Zainol Bidin, for his greatest support, constructive comments, suggestion and motivation throughout the supervision period. I know that my thanks and gratitude will not commensurate his patience, time and guidance given to me towards the accomplishment of this thesis.
I would like to extend my gratitude to my team at work especially my supervisor, Mdm. Zahara Ismail for her encouragement and support that has inspired me to complete this thesis. Special gratitude also goes to Nurul Huda Ahmad for her care and her willingness to share her knowledge with me that has helped me a lot in this journey.
To all who have been involved directly or indirectly in helping me finish this thesis, you know who you are, my sincere gratitude. Finally, I would like to dedicate my special thanks to my love one, Sharul Azmi, for his continuous patience and support throughout my study. To my family in Penang and Selangor especially my father, thank you for endless love and prayer.
Ida Husna Hedzir (88126)
v
TABLE OF CONTENTS PAGE
Declaration i
Permission to Use ii
Abstract iii
Acknowledgement iv
Table of Contents v
List of Table List of Figures
vii viii
Abbreviations ix
CHAPTER 1 : INTRODUCTION
Introduction 1
1.1 Background of the Studies 3
1.1.1 Zakah on employment income 4
1.1.2 Zakah calculation method 4
1.2 Problem Statement 6
1.3 Scope of Study 7
1.4 Research Question 7
1.5 Research Objectives 7
1.6 Significance of the Study 8
1.6.1 Contribution to knowledge 8
1.6.2 Contribution to policy makers 8
1.7 Organization of Study 9
CHAPTER 2 : LITERATURE REVIEW
2.0 Introduction 10
2.1 Theory of Reasoned Action 10
2.2 Theory of Planned Behavior 12
2.3 Attitude 15
2.4 Subjective Norm 17
2.5 Perceived Behavior Control 19
CHAPTER 3 : RESEARCH METHODOLOGY
3.0 Introduction 23
3.1 Data Collection and Measurement 23
3.2 Sample 24
3.3 Data Analysis Technique 25
CHAPTER 4 : RESEARCH FINDINGS
4.0 Introduction 26
4.1 Findings 26
vi
CHAPTER 5 : DISCUSSION AND CONCLUSION
5.0 Introduction 35
5.1 Discussion 35
5.2 Limitation 36
5.3 Conclusion 37
REFERENCES 38
APPENDICES
Appendix A : Cover letter 42
Appendix B : Questionnaire 43
vii
Table 4.1: Respondents’ profile 27
Table 4.2: Descriptive statistics of Variable 29
Table 4.3: Cronbach’s alpha for attitude, subjective norm, perceived 31 behavior control and intention
Table 4.4: Regression of attitude, subjective norm and perceived 33 behavior control against zakah compliance intention
LIST OF TABLES PAGE
viii
Figure 2.1: Illustration of Ajzen’s theory of planned behavior 14 (Ajzen, 1991)
Figure 2.2: A proposed theoretical framework model for intention 22 to pay zakah on employment income among
manufacturing employees
LIST OF FIGURES PAGE
ix
ABBREVIATIONS
ATT Attitude
BI Behavioral Intention
ITT Intention
PBC Perceived Behavior Control
PZS Subjective Norm
SN Subjective Norm
TACT Time, Action, Context and Target
TPB Theory of Planned Behavior
TRA Theory of Reasoned Action
1
CHAPTER ONE INTRODUCTION
After Islam came to Tanah Melayu, zakah, as well as others pillars of Islam including prayer, fasting and pilgrimage, is regularly performed. In general, zakah can be divided into two categories: zakah fitrah and zakah on wealth. There are many types of zakah on wealth such as zakah on company, zakah on agriculture and zakah on employment income. Zakah revenue can be used in several ways to improve standard of living especially to the Asnaf (or people entitled to zakah fund), who have been specifically highlighted in the Holy Quran.
“Alms are for the poor and the needy, and those employed to administer the (funds); for those whose hearts have been (recently) reconciled (to Truth); for those in bondage and in debt; in the cause of God; and for the wayfarer: (thus is it) ordained by God, and God is full of knowledge and wisdom” (Surah Al- Taubah: 60).
The zakah fund can be used to help the Asnaf by providing them with educational aid, finance, training, career and others. Through these aids, the poor and the destitute can actually have opportunities to improve their standard of living.
Because of its significance to the economic situation of the society, contributing to zakah is obligatory and as narrated by Muslim, zakah does not reduce wealth but enhances it. According to Nik Mustapha Hj. Nik Hassan (1995), zakah revenue collected by zakah institution is instrumental in eradicating absolute poverty. For
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